Experts suggest that individuals save AT LEAST 10 percent of their income. The idea is if you start young you will only ever need to put away a small sum of money each month and you will see growth that will be able to fund your retirement years!
When we say savings, we don’t mean saving up for a future purchase like a designer bag, or a trip to Europe we mean putting money into a retirement account or other type of investment account that you invest for the long term. The long term perspective is important because one day when you’re old and grey you are going to need some money to fund your life style and if your only savings are for your next big trip, well then you aren’t really making any headway, are you?
Here are the top three reasons why you need to save AT LEAST* 10 percent of your income:
You probably only need 90 percent (or less) of your income to get by. If you are spending your entire pay check before it even hits your bank account, then you need to take a good hard look at your spending habits from month to month.
You should be able to make it to the end of the month without running out of money and if that isn’t the case you should be adjusting your budget. If you are paid bi-weekly calculate what 10 percent of your pay check is and have it automatically withdrawn each month the day after payday. That way you won’t even miss the money when it’s gone.
Your future self will thank you. If you never put money away for your future self you will never be able to fund your retirement. If you want to live out your golden years with no money then by all means don’t save anything while you are young. On the other hand if you want to see the world, or retire at a lake house cottage then you have to start putting money away for yourself right now!
It will decrease your stress levels! Money causes a great deal of stress for many people in the world and if you start making smart financial choices early on, then you will be able to decrease your stress levels down the road. If that isn’t motivation I don’t know what is.
At the end of the day saving 10 percent of your income income won’t make a huge difference now but down the road your future-self will thank you.
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* Many experts suggest 10 percent but many of us here at GenTwenty want to push you to save even more! Why not save 20 percent of your income? You can do it!